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Venture capital kingpin Kleiner Perkins acknowledges weak results

By Mark Boslet and Sarah McBride

SAN FRANCISCO (Reuters) - Blue-chip venture-capital firm Kleiner Perkins Caufield & Byers expressed frustration with poor fund performance and promised to do better at gatherings for investors last month, according to people familiar with the discussions.

The firm, which has lost some of its shine recently due in part to hefty bets on green energy technology and a lack of home-run Internet investments, said it would be more careful with capital and redouble its efforts to boost performance. Several investors who received invitations to the meetings said it was unusual for Kleiner Perkins to hold such gatherings when it was not raising new funds.

"They're just frustrated and upset that the performance hasn't been as good as they think it should be, and they are candid about it," said one investor, or limited partner, who attended one of the meetings and requested anonymity.

The message was "we're not naïve. We get it," said the investor. "We're going to work our ass off."

A spokeswoman for Kleiner Perkins said: "Communications between Kleiner Perkins and its limited partners are private and confidential. As such, we do not comment on them."

The 41-year-old firm built a reputation by backing technology titans such as Amazon.com Inc, Netscape and Sun Microsystems, but recent investments in Zynga Inc, Groupon Inc and other companies have worked out less well.

Kleiner Perkins was late to the consumer Internet boom and has not delivered a knockout return since the initial public offering of Google Inc in 2004.

The firm's leader, general partner John Doerr, also led a push into alternative energy technology that has foundered in the face of competition from China, plunging natural gas prices and unfavorable government policies.

Kleiner does not release details of its funds' performance to the public. However, recent results have been underwhelming, industry insiders say, and the firm acknowledged as much at the meetings.

Just a few big hits can heavily influence venture returns, and some prestigious funds have rebounded after a rocky stretch. Accel Partners, for example, which was down on its luck in the early 2000s, rode a successful investment in Facebook Inc to venture capital's top tier.

At its recent meetings, Kleiner expressed optimism about the outlook for its newer funds, according to another person familiar with the discussion.

Kleiner's newest fund, the 2012 Kleiner Perkins Caufield & Byers XV, closed at $525 million, according to the firm. Its 2010 digital growth fund totals $1 billion, and KPCB XIV, dating from 2011, totals $650 million.

Many venture firms have sought to strengthen communication with investors in light of the sector's poor performance in recent years. "We Have Met the Enemy ... and He Is Us," a much-discussed study released last year by the Kauffman Foundation, castigated funds for poor performance and high fees — and blamed investors for not asking more questions.

While many top firms court investors with invitations to various events, Kleiner has traditionally been less communicative. It typically holds meetings to discuss strategy and performance only when raising money for individual funds, some investors say.

Last month's meetings were dominated by Doerr, a 33-year veteran and often the firm's public face, and by General Partner Ted Schlein, according to the limited partner who attended one of the meetings. Schlein has been assuming greater responsibilities for internal operations and investor relations.

(Reporting By Sarah McBride and Mark Boslet; Editing by Jonathan Weber; Editing by Lisa Von Ahn)

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